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Dodgy dossier

Policy Exchange has just published a “research note” purporting to show that the tax on cigarettes in the UK should be increased, and that “that every single cigarette smoked costs the country money – 6.5 pence each time someone lights up.”

If you read the paper [pdf], you will find it is an astonishingly dodgy dossier. Here is how the figure is made up:

Taxation of tobacco contributes £10 billion to HM Treasury annually; however, we calculate that the costs to society from smoking are much greater at £13.74 billion. Every cigarette smoked is costing us money. These societal costs comprise not only the cost of treating smokers on the NHS (£2.7 billion) but also the loss in productivity from smoking breaks (£2.9 billion) and increased absenteeism (£2.5 billion); the cost of cleaning up cigarette butts (£342 million); the cost of smoking related house fires (£507 million), and also the loss in economic output from the deaths of smokers (£4.1 billion) and passive smokers (£713 million).

The notion of “cost to society” is a pretty weird one.

Leave that aside for a moment. Add up costs and revenues to the state, which might be one semi-logical way of determining whether the smoking in some sense “runs a deficit”, and using Policy Exchange’s own figures you get a big surplus for the Treasury. Even if you assume all house fire costs are borne by the state and not partially by insurers and householders, and there are no errors in the headline figures, then you can only get to £3,549 million. (Have you noticed how public policy research generally involves implausible numbers of significant digits, and at the same time utter absence of error estimates?) On that basis smokers are contributing roughly £6Bn annually towards public spending.

But what are we to make of the suggestion that counting “lost output” is meaningful? To my mind the idea that an economic aggregate represents a collective wealth that may be politically attributed and redistributed is repulsive even if it is coherent (which I doubt). The state’s royal We, which Policy Echange is channelling here, may in turn choose to impersonate you and me and everyone else, but it only controls the taxed margin of other’s outputs. Output and taxation are apples and oranges. It is meaningless to add them together. Unless you want (or deserve) a punch.

And even were it not meaningless, there’s an accounting fraud here. If you count output putatively lost to smoking, then you must also count the gains. There is the output of the tobacco industry, distribution and retailing in the UK to consider. Imperial Tobacco alone had a gross profit for the year ending September 2009 of approximately £5.3 billion. The CTC industry consists of tens of thousands of small shops. Honest research, however dubious its theoretical basis, would attempt to estimate the value-added, too. It would also be clear – without referring to a paper cited in the footnotes we cannot tell whether the cost-of-illness measure used in determining those “lost outputs” also includes the gains to third parties in pensions unpaid and public services unused by people dying early. If you are going to add apples and oranges, you should also tell us explicitly whether you have subtracted pears.

But what set me off on this chase was actually just one of those headline figures. Most of the margin of costs over gains in this strange sum is covered by the £2.9 billion allocated to the “output lost to cigarette breaks”. How do they know? “[A] number of studies have investigated workers taking breaks in order to smoke, and have tried to quantify this time at between £915 million and £3.2 billion per annum.” Hm.

Read through to p13, and you discover that the number of studies was… two. Er, no. It was one… Or some sort of strange interpolative hybrid… I cannot decide. Make your own mind up:

McGuire et al. estimated that £915 million annually is lost on the basis that average smokers spend tenminutes a day smoking, while light smokers and part-time workers would use approximately half of this
time. The Royal College of Physicians (RCP) used similar initial assumptions on average smoking time to
calculate that some £2.6 billion would be saved through the introduction of smoke-free legislation. Using
McGuire’s estimates of 5.2 million working smokers, with the RCP’s estimates of ten minutes a day smoking
reveals an intermediary figure of £2.9 billion.

I think that is ‘intermediary’ in the sense that a magician is an intermediary between a rabbit and a hat.

However they get there, if someone thinks that cigarette breaks ought to be a determining factor in public policy, rather than a matter for negotiation between employer and employee, then I suggest that it would be a good idea if they are kept as far as possible from the levers of power. This lot are said to be influential on the presumptively incoming Cameron team. Oh dear.

17 comments to Dodgy dossier

  • This lot are said to be influential on the presumptively incoming Cameron team. Oh dear.

    This does not surprise me one bit. Cameron is truly the keeper of the same toxic flame being held aloft by Brown right now.

  • Ooooh, no, they’ve done something far far worse than you think they have. Something for which they should be stripped of their policy wonks’ beanie hats and set aflame in the public square.

    The people who wrote and published this, not the beanie hats.

    There’s absolutely nothing wrong at all with looking at the externalities of peoples’ actions. No problem with looking at the costs and benefits of behaviour: but when you do you must look at both sides of the ledger.

    OK, so, here we’ve got all these costs that come as a result of smoking. OK, fine, we’ll accept those numbers.

    So, what are the benefits of smoking? Anyone? Yes, that’s right. People enjoy doing it.

    Think this through for a moment: the provision of fish for people to eat has costs. The provision of movies to watch has costs. The provision of tampons has costs.

    Yet we don’t run around saying that because these costs exist thus we should tax hell out of fish, movies and tampons. We say that, sure, people enjoy fish, movies and, if not enjoy tampons at least enjoy the not absence of them.

    That enjoyment is why we bear the costs of their being provided.

    So when we try to look at the costs and benefits of smoking we must include in our benefits the enjoyment gained by being able to smoke.

    So, how can we try to value that ability to smoke?

    Given that no one is forced to smoke, it is a voluntary behaviour, we can apply the basic insight about voluntary transactions. The value to the smoker must be worth what is given up in order to smoke. The value must be, necessarily, thus greater than the price paid for cigarettes to smoke.

    By their own calculations something like £12 billion a year is spent upon baccy. Baccy thus provides £12 billion a year (minimum!) of enjoyment. When you add that into your cost benefit analysis then all of the problems compained about go away.

    And that is the unpardonable sin that these people have committed. They’ve claimed to be providing a balanced analysis and they’re either too dim or too mendacious to actually provide a balanced one.

    So burn them I say, burn them in the public square.

    I’ve got a Zippo somewhere around if that will help.

  • Sorry Tim, but you are framing it in terms which are not useful outside of the “metacontext”: unlike fish and tampons (?…), smoking is unhealthy and harmful, everyone knows this – end of discussion.

  • Alisa writes:

    smoking is unhealthy and harmful

    Yes, I agree with her on that.

    And Alisa writes:

    everyone knows this

    I’m pretty much in agreement with that. The majority of people do know, at least in the first world.

    And Alisa writes:

    - end of discussion

    No. That is indicative of very narrow-minded thinking.

    First of all, there are issues of personal freedom, including the freedom to self-harm. [Who believes we should forcibly deprive alcoholics of their drinks, fat people of food above say 1,000 calories/day, bungee jumpers of their thrill?]

    Secondly, Alisa’s argument fails to acknowledge degrees of harm, and of benefit, in smoking (and many other activities) and that these vary with the partaker and their level of consumption [For example, many of us non-smokers drink alcohol and enjoy it, though we are not alcoholics. Does the existence of alcoholism, or more minor medical effects, mean everyone must give up their modest consumption, or be taxed for that which they do not do or risk. Must those that tidy their cigarette ends away be penalised by extra and specifically targeted tax for those who do not?]

    Thirdly, there are all the issues raised by Guy and Tim Worstall. The measurement of harm (and benefit) is clearly presented by Policy Exchange on the basis of argument for outcome, not argument from evidence.

    Fourthly, even when we take this beyond the personal, to societal harm, there is a trade-off. [Do we believe in banning all of us use of private road vehicles, and knives in the kitchen, garden and fields and woods? And of banning the building of hard ground surfaces and flights of steps, on which ourselves (and more likely children and elderly) may well trip and (just occasionally) kill or seriously injure themselves.]

    Lastly there is Alisa’s seeming view that any one person’s opinion (or even that of quite a lot of people) should close down discussion, at any and all time – now or future – for those who disagree with her. That’s surely not a widely held view for commenters here.

    Best regards

  • Narbo

    Haven’t these fun-haters got anything better to do? This appears to be the underlying pathology shared by New Labour, the Green movement and Islam – the fear that someone, somewhere, might be enjoying themselves, and the desperate need to stop them from doing whatever it is they’re enjoying.

  • lukas

    Nigel, you should get that irony detector of yours fixed.

  • Lukas wrote:

    Nigel, you should get that irony detector of yours fixed.

    Maybe; had those symptoms before and the running repair did not really work. Have seen the symptoms in others too, especially over the USA Audi advert. It’s a sod.

    And maybe the explicit refutation of the argument is worthwhile, for those dropping in from outside of the Samizdata metacontext.

    Moving on: does anyone have any views on whether irony is more American and sarcasm more British? Or is it more of a class thing, or even arts versus sciences?

    Best regards

  • Alice

    “smoking is unhealthy and harmful, everyone knows this”

    Interestingly, one of the people who did NOT know this was R. A. Fisher, who went to his grave in the 1960s convinced that the statistical argument on smoking causing cancer was seriously flawed. Correlation is not causation, etc.

    Why should anyone care what R. A. Fisher thought? Only that Ronald Aylmer Fisher had been knighted for his work in statistics, among other things authoring the classic statistical text “The Design of Experiments” back in 1935.

    If one wanted to play games, one could note that the decline of the West since the 1970s has followed the pogrom against tobacco. Equally, people smoke furiously in the now-dynamic East. Does smoking promote creativity & industriousness & productivity? By the (low) standards of the anti-smoking pogrom, there is a case.

    Especially now that we have seen the Anthropogenic Global Warming alarmists abuse statistics to support Politically Correct ends (hockey stick, anyone?), we should be appropriately skeptical about the supposed existence of any poorly-explained statistical argument which (surprise! surprise!) happens to support a statist point of view.

    Anyhow, everyone dies — if not from “smoking” then from something else. Someone did a study a while back pointing out that the people who did not die quickly & cheaply from lung cancer went on to die slow horrible expensive deaths from Alzheimers or senility, requiring literally years of very expensive NHS treatment. I’m too lazy to look up the study right now. Maybe I need a cigarette?

  • Nigel (and maybe Alice too?): what Lukas said, but:

    And maybe the explicit refutation of the argument is worthwhile, for those dropping in from outside of the Samizdata metacontext.

    You do have a point there:-)

  • Alice

    Alisa — maybe the problem is that the Irony Detector works only when there is sufficient nicotine in the bloodstream?

  • Laird

    I question the whole notion of smokers’ breaks decreasing productivity. Everyone takes breaks at work (we tend to call them “coffee breaks”). What does it matter if someone uses that time to enjoy a cigarette (either with or without the coffee)? Or is the argument that smokers take an additional ten minutes of work time for their habit? If so, that should be made clear, but I have my doubts that it is true.

  • Sniggle

    To Nigel (any others interested) American/British
    irony versus sarcasm
    On the American side, Ambrose Bierce, H.L.Mencken,
    Mark Twain (Samuel Clemmens) and Ann Coulter.
    Similar British?

  • Laird

    Truthfully, I’m not completely clear on the distinction between “irony” and “sarcasm”; there seems to be a significant overlap.* Can someone please enlighten me?

    * Here’s part of the Merriam-Webster definition of “sarcasm”: “a mode of satirical wit depending for its effect on bitter, caustic, and often ironic language that is usually directed against an individual.” (emphasis added.)

  • Laird: see here (longish, but well explained).

  • Laird

    Thanks, Alisa. From this definition it appears that, while sarcasm is a subset of irony, it contains an element of personal criticism absent from other forms. Going back to Nigel’s original question about “whether irony is more American and sarcasm more British”, I would therefore suggest that the reverse is true. In my experience Americans tend to be more blunt, even harsh, than do Brits, which is indicative of sarcasm.

  • Paul Marks

    So we are in Cas Susteen land – the “Kingdom of Nudge” where taxes and regulations are used to “nudge” (or shove, or shoot) people into a way of living (and dying) of which the government approves.

    However, the real thing behind these tax increases on tabacco and booze is really GREED – the desire of the govenrment to get more money (other people’e money).

    If the government really thought that higher taxes would stop people smoking and drinking they would be horrified – because they want the money.

    So the whole “health tax” thing is a fraud.

    And, sadly, a fraud that Mr Cameron and little George are as deep in as Mr Brown and Mr Darling.